LONDON: North Sea crude oil differentials fell in active dealing on Tuesday on signs that a glut of crude oil in the Atlantic basin, which has depressed prices to multi-year lows, may not be easily cleared by shipments to Asia.
Differentials fell as a planned 2 million barrel shipment to Asia was cancelled and despite a stoppage at the major Buzzard field, the biggest contributor to the Forties crude stream.
Nexen, operator of the Buzzard field, said it had halted production on Tuesday after briefly restarting output on Monday night for the first time since maintenance began in July.
The firm made a decision to carry out additional work during a rare spell of calm weather.
Vitol, the world's largest independent oil trader, has cancelled plans to ship Forties to South Korea, traders said.
Some speculated that the prolonged shutdown of Buzzard might impact the firm's ability to fill its VLCC in time.
Vitol's buying spree to fill the Front Tina VLCC had helped prise North Sea crude prices off recent lows last week, but on Tuesday the firm was offering Forties crude back to other traders, including a ship-to-ship transfer trade off Scapa Flow.
The Front Tina was sailing south past Portugal without a cargo on Tuesday, according to tanker tracking on Reuters.
No deals were done, but three cargoes of Forties were offered two by Vitol at between minus 35 cents to dated Brent and parity to dated.
Total made two bids for mid-September loading, looking for Forties at minus 55 cents to dated Brent and Ekofisk at minus 45 cents. A glut of crude in the Atlantic basin has depressed prices and differentials.
While some West African barrels are moving to Asia, some traders have expressed doubts the glut will be easily mopped up.
Differentials for Russian crudes in Asia have come under pressure, indicating the glut may just be shifting east.
Still, the arbitrage to shift crudes from the North Sea to Asia remains open, with the key Brent-Dubai spread near multi-year lows, a little above $1 a barrel.
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